To finance their new home, the Colemans have agreed to a $90,000 mortgage loan at 9.25% APR. What will their monthly payments be if the loan has a term of 15 years?
A) $\$ 8325.00$
B) $\$ 11330.60$
C) $\$ 6376.63$
D) $\$ 926.27$
E) $\$ 546.25$

Question

Quizplus · Accepted Answer

To calculate the monthly payment for a fixed-rate mortgage, you can use the formula for a fixed-rate mortgage payment, which is $PMT = P \times \frac{r(1+r)^n}{(1+r)^n-1}$, where PMT is the monthly payment, P is the principal amount ($90,000), r is the monthly interest rate (annual rate divided by 12 months, so 9.25% or 0.0925 divided by 12), and n is the total number of payments (15 years times 12 months). Plugging in the values, the calculation gives a monthly payment of approximately $926.27.

To Finance Their New Home, the Colemans Have Agreed to a $90,000